What would be the depreciation expense in year 1, using units-of-production, for a
molding machine that cost $22,000, had a useful life of 7 years, and an estimated total
machine hours of 40,000? The salvage value is $2,000 and production in year 1 was
8,000 hours.
A) $5,000
B) $4,400
C) $6,000
D) $4,000
The first two numbers of the ABA code listed on the check represent:
A) the Federal Reserve District.
B) the code indicating business or personal account.
C) the routing number.
D) the account number.
After Sally purchased $5,000 of merchandise from Bob, Sally discovered $500 of
defective merchandise. Record the entry for the return. The company uses the gross
method, the periodic method and the voucher system.
A)
B)
C)
D) None of these answers is correct.
The income statement credit column of the worksheet showed the following revenues:
The journal entry to close the revenue accounts is:
A)
B)
C)
D)
M. Smuts showed a net income of $5,000. The entry to close the Income Summary
account would include a:
A) debit to M. Smuts Capital, $5,000.
B) credit to M. Smuts Capital, $5,000.
C) debit to Income Summary, $5,000.
D) Both B and C are correct.
If Net Sales is $10,000, Cost of Goods Sold is $5,000, Gross Profit is $5,000 and
Operating Expenses are $1,000, what is the Net Income from Operations?
A) $2,000
B) $4,000
C) $1,000
D) $3,000
Accrued interest resulting from a trade note receivable would have which effect on the
categories?
A) Total liabilities would be increased.
B) Total assets would be increased.
C) Owner’s equity would be decreased.
D) None of these answers is correct.
Returned merchandise for credit on account. The perpetual inventory system is in use.
This will be recorded with:
A) a debit to a liability and a credit to an expense.
B) a debit to an asset and a credit to an expense.
C) a debit to a liability and a credit to an asset.
D) a debit to an asset and a credit to a liability.
Julia Company allocates its indirect advertising expenses based on each department’s
gross sales. If the men’s apparel department has gross sales of $200,000 out of a total of
$2,000,000 in gross sales, what fraction would Julia use to allocate its indirect
advertising expenses?
A) 1/9
B) 1/10
C) 1/11
D) 1/8
Revenue, expenses, and withdrawals are subdivisions of:
A) assets.
B) liabilities.
C) owner’s equity.
D) All of these answers are correct.
Posting is performed by transferring information from the journal to the:
A) balance sheet.
B) trial balance.
C) ledger.
D) income statement.
Antonio’s catered a reception. The total price was $500. The customer paid half of the
fee in cash and placed the remainder on account. The journal entry to record this
transaction is:
A)
B)
C)
D)
Cory, Brooke, and Amy share profits and losses in a 2:1:1 ratio, respectively, in their
partnership. The assets are to be reduced $10,000 in value when Brooke wishes to leave
the partnership. If each partner had a capital balance of $30,000 before Brooke’s
notification of withdrawal, what amount should Brooke be allowed to withdraw from
the partnership?
A) $25,000
B) $27,500
C) $26,250
D) $33,000
Farm and Supply reissued 100 shares of treasury stock at $20 that had been reacquired
for $15 per share. What is the entry?
A) Debit Cash $2,000; credit Treasury Stock-Common $1,500, credit Paid-In Capital
from Treasury Stock $500
B) Debit Cash $2,000; credit Treasury Stock-Common $2,000
C) Debit Cash $1,500; debit Paid-In Capital from Treasury Stock $500, credit Treasury
Stock-Common $2,000
D) None of these answers is correct.
Another name for the unpaid voucher file is the:
A) accounts receivable file.
B) accounts payable file.
C) tickler file.
D) paid vouchers file.
The inventory turnover ratio calculates:
A) how many times the inventory turns over in one period.
B) number of times inventory is purchased in one period.
C) the dollar amount of change in inventory in one period.
D) None of these answers is correct.
A characteristic of Purchases Returns and Allowances is:
A) it has a normal credit balance.
B) it increases when merchandise is returned.
C) it decreases cost.
D) All of the above are correct.
To correct an error made in the journal (prior to posting in the ledger):
A) erase the error and write the correct entry.
B) write a new journal entry correcting the original entry.
C) No adjustment is required.
D) None of the above is correct.
If management wishes to know how long it takes to collect from a charge customer,
they could use the:
A) rate of return on total assets.
B) average collection period.
C) acid test ratio.
D) current ratio.
Cost of Goods Sold equals:
A) Beginning Inventory + Net Purchases + Freight-in + Freight-out + Ending Inventory.
B) Beginning Inventory – Net Purchases – Freight-in + Ending Inventory.
C) Beginning Inventory + Net Purchases + Freight-in – Ending Inventory.
D) Beginning Inventory – Net Purchases + Freight-in + Ending Inventory.
The entry to record MidIowa.net selling 1,000 shares of $6.00 par value common stock
at $8.00 would be to:
A) debit Cash $8,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of
Par Value-Common $2,000.
B) debit Cash $8,000; credit Common Stock $8,000.
C) debit Cash $6,000; debit Paid-in Capital in Excess of Par Value-Common $2,000;
credit Common Stock $8,000.
D) None of these answers is correct.
The check is written and signed by the:
A) drawer.
B) drawee.
C) bank teller.
D) None of the above
What liability account is reduced when the employees are paid?
A) Payroll Taxes Payable
B) Federal Income Taxes Payable
C) Wages and Salaries Payable
D) Wages and Salaries Expense
The following normal account balances were found on the general ledger before closing
entries were prepared:
After closing entries are posted, what is the balance in the Revenue account?
A) $800
B) $0
C) $400
D) Closing entries do not affect Revenue.
An entry to appropriate a portion of retained earnings to finance a future plant
expansion would include a credit to:
A) Paid-in Capital in Excess of Par.
B) Retained Earnings Appropriated for Plant Expansion
C) Retained Earnings.
D) Unappropriated Retained Earnings.
If management wishes to evaluate the amount of assets which were financed by
creditors, they could use the:
A) debt to total assets.
B) rate of return on common stockholders’ equity.
C) debt to total liabilities.
D) times interest earned.
The perpetual inventory method is:
A) used by companies with a variety of merchandise with low unit prices.
B) used by companies with low amounts of inventory.
C) not used by many companies today.
D) does not ever require a physical inventory.
Condi Corporation sells $150,000, 5%, 10-year bonds for 95 on January 1, 2016.
Interest is paid on January 1 and July 1. Straight-line amortization is used. The amount
of interest paid on July 1, 2016 is:
A) $4,750.
B) $5,750.
C) $3,750.
D) $5,000.
Jason Moore purchased computer equipment for $5,000 on January 1, 2015. It has a
residual value of $200 with a useful life of 6 years. After the appropriate adjusting
entries have been made, the balance in Accumulated Depreciation account for this asset
on January 1, 2017, under the straight-line method, should be:
A) $800.
B) $1,600.
C) $2,400.
D) $3,200.
Sue’s Jewelry sold 30 necklaces for $25 each to a credit customer. The invoice included
a 6% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned
prior to payment. The entry to record the payment after the discount period would
include:
A) a credit to Cash for $625.00.
B) a credit to Cash for $662.50.
C) a credit to Accounts Receivable for $625.00.
D) a credit to Accounts Receivable for $662.50.
The Bixby Co. had the following transactions involving the purchase of merchandise.
Prepare the necessary general journal entries. Any applicable freight costs are prepaid
by the seller. The perpetual inventory method is in use.
June 16 Purchased merchandise having a price of $6,000 from the Shelby
Manufacturing Co.
on account with credit terms 2/10, n/30. Transportation terms F.O.B destination.
June 16 Purchased merchandise having a price of $9,000 from the Ajax Supply House
on account with credit terms 2/10, n/30. Transportation terms F.O.B shipping point.
The freight costs of $175 were added to the invoice. Merchandise was shipped June 16.
June 17 Received the goods from Shelby.
June 17 Received the goods from Ajax.
June 20 Returned for credit merchandise with an invoice price of $800 to Ajax.
June 25 Paid Shelby the amount owed.
June 28 Paid Ajax the amount owed.
June 30 Returned for cash, merchandise with an invoice price of $400 to Shelby.
Prepare the necessary general journal entry for June 17. Received the goods from Ajax.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
Prepare the financial statements for H. Logan of Logan Motorcycles from the following
account balances: 1) an income statement, 2) a statement of owner’s equity, and 3) a
balance sheet for the month ended October 31, 200x. You will need to calculate the
value of the Accounts Payable account (note: remember the basic accounting equation).
Prepare the journal entry to record the partners’ investment in the company.
Palmer invests $3,000 cash and equipment on his books at $6,000 with accumulated
depreciation of $500. The fair market value of the equipment is $6,000. Evans is
investing $6,000 cash and $1,000 accounts payable.
Given the income statement columns and the balance sheet columns of the worksheet,
prepare a balance sheet dated December 31, 200X, for Baur Company.
Equipment was purchased for $50,000, residual value is $2,000 and it is expected that
the useful life is 10 years. What is the book value of the equipment after the first year
assuming straight-line depreciation?
$ ________
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Allowance for doubtful accounts
[4] Merchandise inventory
[5] Store supplies
[6] Store equipment
[7] Accumulated depreciation
[8] Notes payable
[9] Accounts payable
[10] Able Partner’s, Capital
[11] Baker Partner’s, Capital
[12] Able Partner’s, withdrawals
[13] Baker Partner’s, withdrawals
[14] Income summary
[15] Service revenue
[16] Gain on realization
[17] Loss on realization
Indicate the account(s) to be debited and credited to record the following transaction.
Closed the income summary to the partners’ accounts with a net income.
Debit ________ Credit ________ & ________
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, and in column 3 the financial
statement on which the account balance is reported.
If cash flow is so important to merchandisers, why do they extend credit to their
customers?
Cooper Company began business in June. Prepare the following transactions for June.
Omit explanations.
June
2 Cooper invested $3,000 cash and $1,000 equipment into her new business
12 Billed customer for services performed, $600
16 Purchased equipment on account, $200
20 Received one-half amount due from June 12
25 Cooper withdrew cash for personal use, $200
Below is a list of expenses; you are to identify each as either [1] a direct expense or [2]
an indirect expense.
Wages paid to the supervisor of an automobile repair shop. ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the nature of the
account (permanent/temporary).
The company pays $3,000 per 5 day work week. The total expenses as of Friday, April
27 were $12,000. What would be the month’s total expenses as of April 30 (assuming
no pay is earned over the weekend)?
$ ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the nature of the
account (permanent/temporary).
Example:
On December 31, 2015, Landscape Pros had a balance in Accounts Receivable of
$25,000. Net credit sales for the year were $400,000. The Allowance for Doubtful
Accounts has a debit balance of $500. Journalize the recording of the bad debt expense
under the income statement approach if 0.5% of net credit sales is deemed
uncollectible.
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Allowance for doubtful accounts
[4] Merchandise inventory
[5] Store supplies
[6] Store equipment
[7] Accumulated depreciation
[8] Notes payable
[9] Accounts payable
[10] Able Partner’s, Capital
[11] Baker Partner’s, Capital
[12] Able Partner’s, withdrawals
[13] Baker Partner’s, withdrawals
[14] Income summary
[15] Service revenue
[16] Gain on realization
[17] Loss on realization
Indicate the account(s) to be debited and credited to record the following transaction.
The business bought store equipment on account.
Debit ________ Credit ________
Bonds that can be bought back by the corporation before the maturity date are called
________ bonds.
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account’s nature (permanent/temporary).